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Housing Policy --- Section 4-3

CONTINGENCIES & COST SAVINGS

Policy Statement

Development projects are expected to have an adequate contingency to cover unforeseen costs.

Policy
CONTINGENCY AND ALLOWANCE AMOUNTS:
Hard Cost Contingency: For New Construction Projects the contingency shall be equal to 5% of construction contract amount. For Rehabilitation Projects, the contingency shall be equal to 10% of the construction contract amount.

Allowances: For new construction projects, separate allowances for unforeseen environmental and site work, handicapped accessibility and/or window guards, should be carried outside of the construction contract and be in addition to the above contingencies.

Soft Cost Contingency: For both New Construction and Rehabilitation Projects, the contingency shall be equal to 2.5% of the total soft cost budget.

COST SAVINGS:
Allowances: If the allowances are not needed for intended purposes, the budget will be reduced by the total amount of the unused allowance and the public subsidy provided to the project will be reduced by the same amount.

Cost Savings & Unused Contingency:
At the end of a project (and following the completion of all change orders and approval by DND of the costs), the final actual total cost of the development (Final TDC) will be compared to the initial approved budget from the Closing. If there are any costs savings (except for unused allowances), 50% of the savings may be drawn down by the developer as additional fee. The balance of the cost savings will be used to reduce the principal amount of the Subsidy loan.

4-3 (6/05)

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